Apple is threatening to shut down the iTunes store if a change by the National Music Publishers' Association agrees to a decision to increase the royalty rates for digital music. Currently, the fee is 9 cents per song, but they are considering raising the rate to 15 cents per song (66% increase).

Apple finds this an unacceptable rate to keep iTunes a viable business and will not increase prices to absorb the blow, stating,
"Apple has repeatedly made it clear that it is in this business to make money, and most likely would not continue to operate [the iTunes music store] if it were no longer possible to do so profitably."

The Board's first meeting will set the rates for digital media for the next 5 years.

Apple currently has an 85% share in the online, digital music market, with most of its success from selling songs for 99 cents. According to Apple, 70 cents of every song purchase goes to record companies, who in turn give 9 cents of that 70 to music publishers.

The Board states that the digital media market is a $1.2 billion industry.

Apple, through the Digital Media Association who represents them, is asking the board to reduce the current loyalty to 4.8 cents a track, or 6% of "applicable revenues."

Music publishers are unmoved as they see that digital music is growing in size, and they want their share of the profits.

Apple is the "walmart" (read: monopoly) of internet media. They get their way every time on everything they do. They shove volume numbers in people face and push their way around through and over anyone they want. Personally I could give a damn less if iTunes closes, but Apple is just pissing and moaning because they have to make changes to continue being profitable. They won't close, they'll raise rates no matter what they say. They are just playing the game by saying they won't.

Apple doesn't like being told what to do. They are not in control of this issue and it pisses them off to no end that someone ELSE can tell THEM what to do. When iTunes closes Microsoft's Zune takes the digital media world and Steve's pride will never allow it. So forget that transparent threat.

I agree with what you are saying. That is very true, however isnt it getting a little old what Movie and Record companies are doing? You make millions, fine with me. Thats our system and I support it. However its getting a little redundant when they whine and ask for so much more money always and infinitely. The artists starting out get screwed left and right with vague and tricky contracts. They then "over produce" (which I hate that word) and dilute the music/movies and spend more time/money marketing the garbage instead of investing more in the music itself. Apple goes for a profit, good. Quit whining and laying smokescreens to up the price and take the heat off of them and point it towards the record companies.

What Im saying is, both of these companies dont need to fix what isnt broken. If its broken on the Music Biz side, fix it internally, not go after people who spread and buy your swill. I also dont use iTunes, I like collecting the actual vinyl and cd's with original casing.

So they are currently making about 25 cents a song which will go down to about 20? Seems like it is still tremendously profitable to me... I mean how many songs do they sell each day?

Also look at amazon... they sell tracks for well under 99 cents OFTEN. How can they afford to do it then?

Last edited by sziklassy; 10-03-2008 at 02:02 PM.

------------------------------------------------------------------------------------------------------------------------------------------------------------------
I once prayed to God for an iPhone, but quickly found out He didn't work that way...so I stole an iPhone and prayed for His forgiveness.

A dog is the only thing on earth that loves you more than you love yourself. - Josh Billings

I think this needs some clarification. Apple is threatening to shut down the iTunes Music Store, not iTunes. The ability to order TV, Movies, iPhone Apps, etc... would all remain. Besides, its just a scare tactic to get the Feds to back down. I think they're rather get the existing royalties than nothing at all.

Killing iTunes would be a HUGE step back for Apple. It is what got them most of their 8% (lol) market share. Doubt they will do this.

------------------------------------------------------------------------------------------------------------------------------------------------------------------
I once prayed to God for an iPhone, but quickly found out He didn't work that way...so I stole an iPhone and prayed for His forgiveness.

A dog is the only thing on earth that loves you more than you love yourself. - Josh Billings